The Motivation for Internationalisation
1. Essential reasons
The internationalisation of an enterprise widens the horizons for activities on various fronts like sales, procurement, production, developments and other operation activities across the country barriers. It provides a wider market and activity areas for any enterprise. For example, in the case of an automobile plant of Honda, which has been operating in America, it can be called as the internationalisation of the plant, which forms the base for the production activities.
Here, we shall try to see how the border crossing by any enterprise with regard to the market and activity zone differs from the regional expansion within the country. Further, let us try to study various topics of management which evolve as a consequence of internationalisation. The internationalisation of sales market has been carried out for quite sometime in the form of export of exports. Further, even the internationalisation of procurement market has also been in practice since Meiji era in Japan.
The essential reasons for carrying out type of internationalisation have opening of new market and acquiring the resources. The market opening here basically refers to the sales market and the internationalisation for acquiring resources refers to tapping of overseas procurement market for the management resources including the raw material, capital investment which are required to carry out production.
2. Secondary reasons
The above mentioned two reasons can be called as the factors responsible for initiating the internationalisation of the enterprise. However, the internationalisation of this sort gives birth to the following mentioned internationalisation resources.
The reasons responsible for the birth of internationalisation are the harmonisation with international political system, harmonisation with international economic system and the improvement of the efficiency of international management.
· Harmonisation with the international political system
Location of an enterprise in a foreign country for the sake of evading trade friction is a typical example of this reason. The location of an enterprise in a foreign country aims at avoiding the possibility of bad effect on the enterprise activity arising out of confrontation between the two nations due to the political interest.
· Harmonisation with the international economy system
This reason refers to setting up of production of procurement facilities overseas to checkmate the variations in profits due to foreign currency rates fluctuation, especially for those enterprises which have their major sales on dollar payment. In other words, this is a mechanism of providing defensive rules to avoid any negative influence of one’s activity arising out of the characteristics of international economy system. It also aime at turning this chartacteristic to one’s own advantage. The internationalisation of financial activity is an example where characteristics of international economy are being properly used.
· Improving the efficiency of international management
The production of goods like a television and stereo system etc. in a country having low labour cost, as seen in the case of Japanese electrical home appliances industry’s entry into South-East Asia, is a typical example of improving the efficiency of international management. However, the local production of automobiles in America and Europe by the Japanese automobile industry may also be called as the examples of improving the efficiency of management, in ultimate sense.
The local production of automobiles in the foreign nations, in most of the cases, was initiated for evading the trade friction originally. In other words, for the sake of Harmonisation with the international economy system. However, as a consequence of such an exercise, the efficiency of activity in American and European market increased and it became possible to provide the products matching the needs of time.
In this way, the improvement of efficiency in international management called for further developments of activity in the direction of further internationalisation so that the enterprise activities, which has undergone internationalisation for the sake of development of new market and acquiring the resources can be managed more effectively.
The above mentioned three reasons explain how the internationalisation differs essentially from the expansion of activities on regional basis within the country. Furthermore, the extension from essential reasons to secondary reasons shows the tendency of internationalisation of enterprises giving birth to further internationalization.
1. Essential reasons
The internationalisation of an enterprise widens the horizons for activities on various fronts like sales, procurement, production, developments and other operation activities across the country barriers. It provides a wider market and activity areas for any enterprise. For example, in the case of an automobile plant of Honda, which has been operating in America, it can be called as the internationalisation of the plant, which forms the base for the production activities.
Here, we shall try to see how the border crossing by any enterprise with regard to the market and activity zone differs from the regional expansion within the country. Further, let us try to study various topics of management which evolve as a consequence of internationalisation. The internationalisation of sales market has been carried out for quite sometime in the form of export of exports. Further, even the internationalisation of procurement market has also been in practice since Meiji era in Japan.
The essential reasons for carrying out type of internationalisation have opening of new market and acquiring the resources. The market opening here basically refers to the sales market and the internationalisation for acquiring resources refers to tapping of overseas procurement market for the management resources including the raw material, capital investment which are required to carry out production.
2. Secondary reasons
The above mentioned two reasons can be called as the factors responsible for initiating the internationalisation of the enterprise. However, the internationalisation of this sort gives birth to the following mentioned internationalisation resources.
The reasons responsible for the birth of internationalisation are the harmonisation with international political system, harmonisation with international economic system and the improvement of the efficiency of international management.
· Harmonisation with the international political system
Location of an enterprise in a foreign country for the sake of evading trade friction is a typical example of this reason. The location of an enterprise in a foreign country aims at avoiding the possibility of bad effect on the enterprise activity arising out of confrontation between the two nations due to the political interest.
· Harmonisation with the international economy system
This reason refers to setting up of production of procurement facilities overseas to checkmate the variations in profits due to foreign currency rates fluctuation, especially for those enterprises which have their major sales on dollar payment. In other words, this is a mechanism of providing defensive rules to avoid any negative influence of one’s activity arising out of the characteristics of international economy system. It also aime at turning this chartacteristic to one’s own advantage. The internationalisation of financial activity is an example where characteristics of international economy are being properly used.
· Improving the efficiency of international management
The production of goods like a television and stereo system etc. in a country having low labour cost, as seen in the case of Japanese electrical home appliances industry’s entry into South-East Asia, is a typical example of improving the efficiency of international management. However, the local production of automobiles in America and Europe by the Japanese automobile industry may also be called as the examples of improving the efficiency of management, in ultimate sense.
The local production of automobiles in the foreign nations, in most of the cases, was initiated for evading the trade friction originally. In other words, for the sake of Harmonisation with the international economy system. However, as a consequence of such an exercise, the efficiency of activity in American and European market increased and it became possible to provide the products matching the needs of time.
In this way, the improvement of efficiency in international management called for further developments of activity in the direction of further internationalisation so that the enterprise activities, which has undergone internationalisation for the sake of development of new market and acquiring the resources can be managed more effectively.
The above mentioned three reasons explain how the internationalisation differs essentially from the expansion of activities on regional basis within the country. Furthermore, the extension from essential reasons to secondary reasons shows the tendency of internationalisation of enterprises giving birth to further internationalization.